Byco Petroleum Pakistan Limited
a research report on byco petroleum...
BYCO PETROLEUM PAKISTAN LIMITED (BPPL)
BYCO PETROLEUM PAKISTAN LTD.
HISTORY: BYCO Group was founded by the Founder Chairman, Mr. Parvez Abbasi (Late) in mid90’s with the vision to pioneer the change in the energy sector of Pakistan. With his vision, the company Byco Petroleum Pakistan Limited was formed in January 1995 as public limited company. BYCO installed its first oil refinery with a 30,000 barrels a day at Mouza Kund, Hub Balochistan and started its commercial production from July 1, 2004 with various saleable components including Liquefied Petroleum Gas, Light Naphtha, Heavy Naphtha, High Octane Blending Component, Motor Gasoline, Kerosene, Jet Fuels, High Speed Diesel and Furnace Oil. In 2008, the company decided to enter into the Petroleum Marketing Business and set up the first retail outlet, and since then the retail network has grown immensely.
BYCO IN BRIEF: BYCO is Pakistan’s emerging energy companies engaged in the businesses of oil refining, petroleum marketing, chemicals manufacturing and petroleum logistics. Headquartered in Karachi, they are serving thier mission to fulfill the energy demand within and beyond borders. Companies under BYCO umbrella are:
BYCO Oil Pakistan Limited (BOPL) ------Oil Refining & Chemical Manufacturing BYCO Petroleum Pakistan Limited (BPPL) -----Oil Refining & Petroleum Marketing BYCO Terminals Pakistan Limited (BTPL) ---------infrastructure and logistics
They are engaged in manufacturing of a wide range of petroleum products with the objective to achieve sustainable productivity, profitability and high standards of care for environment, health and safety. BYCO’S operational refinery has a capacity to refine 35,000 barrels a day of crude oil into various saleable components including Liquefied Petroleum Gas, Light Naphtha, Heavy Naphtha, High Octane Blending Component, Motor Gasoline, Kerosene, Jet Fuels, High Speed Diesel and Furnace Oil.
They take pride in having the largest capacity crude oil storage tanks in the country. Their marketing network supports retail outlets in more than 80 cities all over Pakistan and is an emerging leader in oil marketing sector of our economy. Their diverse and highly skilled workforce consists of approximately 600 dedicated employees shared among BYCO companies.
BYCO PETROLEUM PAKISTAN LTD: Name: Status: Established: Business Sector: CEO: Company Auditor: Shares Registrar: NTN: CUIN:
BYCO Petroleum Pakistan Limited Public Limited & Listed Company January 9, 1995 Oil Refining and Petroleum Marketing Amir Abbassi KPMG Taseer Hadi & Co., Chartered Accountants FAMCO Associates (Pvt) Limited 0815616-6 0034007 Karachi Chamber of Commerce (KCCI) Lasbela Chamber of Commerce & Industry (LCCI) Overseas Investors Chamber of Commerce & Industry (LCCI) Petroleum Institute of Pakistan (PIP) Oil Companies Advisory Committee (OCAC) Employee's Federation of Pakistan (EFP)
9t Floor, The Harbour Front, Dolmen City, HC-3, Block-4, Marine Drive, Clifton, Karachi-75600, Pakistan.
BYCO Petroleum Pakistan Limited was incorporated in Pakistan as a public limited company on January 09, 1995 and was granted the certificate of commencement of business on March 13, 1995. The shares of the company are listed on the Karachi, Lahore and Islamabad Stock Exchanges. The Company is engaged in the business of refining crude oil into various saleable components including Liquefied Petroleum Gas, Light Naphtha, Heavy Naphtha, High Octane Blending Component, Motor Gasoline, Kerosene, Jet Fuels, High Speed Diesel and Furnace Oil. The Oil Refinery is located at District Hub, Lasbela, Balochistan. The Company commenced its commercial production from July 1, 2004 and ramped up the capacity to 30,000 bpd from February 2008 after debottlenecking of the whole plant.
The refining capacity was enhanced by 5,000 bbl/day during turnaround in June 2010, hence making the total refining capacity to 1.738 (million metric tons per annum) or 35,000 (barrels per day). During the year 2007, the Company has launched its fuel marketing activities managed by the Petroleum Marketing Business (PMB) formerly known as Oil Marketing Unit. The business has been re-launched with a new vision and has developed progressively during this period and is now growing aggressively, more than 219 retail outlets have been set-up, primarily focusing on retail segment and PMB is now expanding the canvas by targeting to become a dominant player in the industrial, international and retail segments. Going forward, PMB will be increasing its product portfolio by adding LPG and lubricants as well. Plans are also underway to make LPG available at the Filling Stations, as well as to market LPG cylinders with the Company’s Brand through a distribution network and launch branded lubricants for the automotive and industrial sectors which will be available at the Filling Stations as well as in the commercial markets. PMB is focusing and planning to cater to the international opportunities available in the region where it can market petroleum and lubricant products. With ever-increasing competition in the market today, availability of product is a major challenge for all Oil Marketing Companies (OMCs). BYCO has a distinctive advantage through its Refinery, to meet the product requirement in the south of the Country.
PRODUCTS AND SERVICES OF BYCO: 1. RETAIL NETWORK: Byco is an emerging leader in oil marketing sector and has reached its consumer market through its retail station network across Pakistan. Byco has focused on retail network development since 2007 and since then has made phenomenal progress in network growth.
2. LIQUID FUELS:
High Speed Diesel
Ultra Winterized Diesel
3. GASEOUS FUELS:
CNG (Compressed Natural Gas)
LPG (Liquefied Petroleum Gas
4. LUBRICANTS: Byco intends to be at the forefront of high technology finished lubricants, which the Automotive, Industrial and Marine equipment manufacturer shall trust to deliver the value through the technology that protects engines and equipment.
5. SERVICES AND QUALITY ASSURANCE: Byco introduces state-of-the-art Mobile Testing Laboratory all across the country to bring its customers clear options for top quality Gasoline, Diesel, and Lubricants. Our Mobile Testing Laboratory will check the quality and quantity of refined fuels and lubricants so that the supply of unadulterated products with accurate quantity can be assured every time, everywhere.
Our research topic is to find out the reasons of loses that the company “BYCO PETROLEUM PAKISTAN LTD” has been facing for new years.
Increase in oil price in international market Energy crises High inventory turnover rate Rise in liabilities Finance problem facing by company Launched new project (SPM) and no finance to support it.
EVIDENCES IN SUPPORT OF PROBLEM STATEMENT
BYCO’S BAFFLING BALLON Over Rs1 billion operational loss disrupts Byco’s business operations - Byco, one of the country’s energy giants, saw its operational loss ballooning by 74.4 percent or Rs :507 million owing to the company’s reduced sells, Profit learnt Wednesday. According to the company’s consolidated profit and loss account, during first quarter of the current fiscal year, July-September FY2012, Byco faced a loss after taxation of Rs: 1.118 billion compared to Rs:681.170 million the firm incurred in the corresponding period last year. The loss per share, basic and diluted, amounts to Rs:1.14 against last year’s Rs: 1.74. During the period under review, the net sales of the company have declined to Rs:5.348 billion as compared to Rs: 7.899 billion during the same period in FY11. “The company continued facing significant working capital constraints which resulted in limited supplies and disrupted business operations during the quarter ended Septemb er 30 (2011)”, the company’s chief executive officer told the shareholders at Karachi, Lahore and Islamabad stock exchanges and the Securities and Exchange Commission of Pakistan. As a result, he said, the company suffered a loss after taxation of Rs:1.188 billion for the period as compared to a loss after taxation of Rs:681 million in the last corresponding period. Byco is country’s emerging energy companies engaged in the businesses of oil refining, petroleum marketing, chemicals manufacturing and petroleum logistics. Headquartered in Karachi, the firm is catering the energy demand in and outside Pakistan. The companies that work under Byco’s umbrella include Byco Oil Pakistan Limited, Oil Refining & Chemical Manufacturing, Byco Petroleum Pakistan Limited, Oil Refining & Petroleum Marketing, Universal Terminal Limited and Infrastructure and Logistics. (BY ISMAIL DILAWAR)
BOSICOR PAKISTAN LIMITED – Analysis of Financial Statements Financial Year 2004-3Q Financial Year 2011 August 1, 2011rizwanharunLeave a comment Recent results (3Q11) Byco’s performance was supported by the fact that the exchange rate remained relatively stable and at the same time the crude prices saw an increase of 52.4% which resulted in positive GRMs for the 9Ms under review.
Production and consumption: Bosicor Pakistan Limited’s activities in Pakistan are primarily based on the production and sale of petroleum products. The range of products include: light straight run naphtha, liquid petroleum gas (LPG), heavy naphtha, kerosene, motor spirits, high octane blending component, aviation fuels 1 & 4, high speed diesel and furnace oil. The company has a long-term sale and purchase agreement with Pakistan State Oil for marketing of its products. Share of the petroleum products is about 40 percent of the current energy consumption in Pakistan. This consumption has grown sharply during 1980s at rate of almost 7 percent per annum but it has shown a decreasing trend during 1990s and later it gained the pace during 2004-2005 at about 10 percent per annum. Transport and agricultural sectors are the two major users of gasoline. In recent years a high amount of subsidy was being provided by the government of Pakistan over gasoline due to which its consumption has increased. But in 2007, increase in oil prices in international market effected Pakistan economy due which government is no more in a position to provide same amount of relaxation on gasoline as before some years due to which government is gradually reducing the subsidy levels as result Gasoline prices are increasing locally also and effecting the consumption. Secondly government is promoting the compressed natural gas (CNG) sector in Pakistan and encouraging the transport sector to convert their transport on CNG. This indicates that in the coming years, Pakistan will see reduced consumption of gasoline products. But there is no alternative of gasoline in agriculture sector and as a result, this sector is facing extreme difficulties due to rise of gasoline prices. Furnace oil or fuel oil is normally used for production of Electricity via thermal power plants. At the moment country is facing extreme energy crisis and government is planning for short term power generation plants that are oil based and also encouraging
independent power producers to invest in the country. As all the new thermal power plants are oil based and also country has now very limited natural gas resources the consumption of furnace oil will also increase in the coming years.
Asset management: The company’s asset management performance was way below the industry averages. Inventory Turnover (Days) went up from 36 days in FY09 to 43 days in FY10. This was due to the fall in sales in the current fiscal year. It was above the industry average of 31.8 days. However the company did show improvement in its Day Sales Outstanding (Days) numbers, which went down to 60 days in FY10 compared to 73 days in FY09. However it was still way above the industrial average of 45.5 days. Summing up these two, one gets the operating cycle of the company, which is the average number of days between buying inventory and getting its payment after sales. The company had an operating cycle of 103 days compared to 110 days in the previous. The industry had an average operating cycle of 87 days. These numbers indicate that the company was less efficient in recovering cash from its customers. This can be accounted to the circular debt crisis, which showed no signs of declining in FY10.
Debt management: The company’s debt management performance has been somewhat poor compared to the overall industry results. Debt to asset ratio was 113% compared to 108.2% last year, which indicates an increase of about 4.5%. This was mostly due to the huge rises in the current liabilities with the trade and other payables going up by 8.7%, accrued mark-up by went up by 32% and the current portion of long-term liabilities also went up by 37%. However on the positive note, the company had started to pay back some of its unsecured long-term debt, which went down by 36.22%. The debt to equity ratio fell down to 4.51 from 5.12 in the last year. This was due to the rise in the accumulated losses of 13.14%.
Liquidity The company did not show any commendable performance when it comes to liquidity. Its current ratio fell down by 29% to 0.52 compared to last year’s 0.72. This was mostly due to the changes in current assets, which fell down by 18.8% and the current liabilities, which went up by 13.85% due to the rise in trade and other payables. Company’s current ratio was below the industry average of 0.70, showing poor management performance of cash and other liquid assets compared to its peers. Quick ratio also showed similar performance, going down by 38% to 0.33 compared to the industry averages of 0.68. These numbers show that the company had a very poor liquidity performance in FY10 and it results in bankruptcy for the company. To solve this
issue, the company should let go of some non-performing assets as well as borrow long-term finances instead of relying on the short term ones which can prove to be costly in terms of high interest costs and early maturity refinancing.
Future outlook Future outlook for the company is good on account of the excellent performance by the Petroleum Marketing Business, which has been successful in setting up 160 retail outlets. Its staggering growth rate of 208% and 390% in retail sales makes it a promising business. The business has built on its customer base by acquiring major customers in the bunkering and marine business, industrial consumers, captive power projects, cement industry and consumer good companies. Also the company has carved a niche in the oil market by providing specialized fuels such as Ultra Winterized Diesel and RMG 380. Starting from next year, the company is expected to provide a one of its kind LPG auto gas facility at its retail stations, apart from marketing it through cylinders and in bulk, providing greener energy options to our customers and creating a cleaner environment in the country. The company also plans on launching an auto lubricant product, which is expected to be exported to UAE in the coming years. The company will soon be the biggest oil refinery in the country. The company is expected to increase its potential processing capacity to 40,000 barrels next year. Also the company’s management has been aggressive cost -cutting measures which have helped in lowering its wastage costs and will further decrease such costs in the future as well.
Thursday, August 2nd
May 14, 2012 2:25 am0 commentsViews: 64 Mr. Kalim A. Siddiqui – President Petroleum Marketing Byco Petroleum Pakistan Limited . Q3. What’s your opinion globally change in market trends for last ten years?
It has been an interesting time for businesses in general and the oil industry in particular due to ups and downs in our macroeconomic situation in recent years. International oil prices affect all businesses and because we are directly involved in the business of oil it has significant impact on our business and strategies. The price of crude oil rose to its highest level ever, and then crashed as the world economy collapsed around the banking crisis. Oil provides 40 percent of all primary energy, and approximately 90 percent of our transportation energy. However, the volatile nature of oil prices has shaken the foundation of the transportation-oriented global economy, and sent ripple effects throughout numerous sectors. It was an extremely difficult time for the refining sector to operate profitably while maintaining commitments to supply the Pakistan fuels market. The global downturn reduced demand for liquid fuels worldwide resulting in depressed refining margins. During this period there has been a reduction in Diesel demand in the Country, as the transportation sector has witnessed a decline. Moreover competition has greatly increased and has put us face to face with not only local but global competitors. We need to account for dynamic changes taking place across the world when making corporate strategies. There have been major ups and downs in terms of business activity and economic changes. Some changes have turned up as opportunities and others have posed problems and much of it is happening at a fast pace. Therefore we need to adapt at a
faster pace also and take advantage of the opportunities, overcome weaknesses and combat threats with sound business strategy.
Q6. What are the issues and constraints you are facing in this sector? Your suggestions to resolve them?
The petroleum market in Pakistanis vulnerable to internal and external shocks. Following factors are significantly affecting the domestic petroleum market: • Volatility of global crude oil prices • Decline in refinery margins • Political and economic unrest in Pakistan • Uncertainty and lack of proactive decision making by policy makers. These trends in particular are affecting the cost of doing business in Pakistan. However we are committed to provide one window energy solutions to the consumer. Whereas foreign investment is low in Pakistan owing to security challenges, yet we see an opportunity for investment in refining, petroleum marketing and chemicals business. This is the reason as to why we are expanding our capacity, investments and networks despite external shocks. There is one problem which is broad based and faced by all businesses in Pakistan that is continuity and long term policies regarding business and commerce. Every new government rejects the policies of the previous government and makes its own which has negative consequences on business entities and investors. Most investors come in the country with a 3-4 year business plan. Therefore any unexpected change in policies as a result of a change in the political set up during this period would discourage investors to take the risk. Investors and business men would only bring in investments if they expect a fair return, long-term continuity in policies and stability of the government. Government should carry out long term planning with continuity in policies and a broader vision. It should put emphasis on developing and incorporating new technologies and ideas that would strengthen the economy and provide stability to the country. If we all work with honesty and integrity and give the required dedication towards the needs of our country I strongly believe that we would not need any assistance from IMF or any other international aid agencies.
Q7. Do you think the performance of your company is satisfactory in current year 2010?
Every player is striving to perform better than its competition and provide the best quality of service to its consumers optimizing available resource, so as to capture maximum market share. Byco has achieved 2.6% market share in 2010 as compared to 0.8% last year, which is a growth of 162%, and is the 6th largest OMC of the country. This is an achievement for our company. Byco brand launch has been a major development for the company as well as the industry it operates in. It is the result of a unique branding exercise never done in Pakistan before. The roll out of the new identity has just begun and we are already receiving positive feedback from various quarters. Although it is a bit too soon to see impact on market share but we are expecting significant impact on company performance as well corporate image of Byco as the retailer of choice. There have been limitations due to the current business and political situation in the country which has affected business. The government needs to review policies related the oil sector and take corrective actions to encourage more investment and make the industry viable and attractive for all. Due to these reasons business has been affected in terms of achieving set targets and performance has also been hampered. But we have achieved a lot in a short span of time and have been one of the fastest growing companies in the industry. But at the same time we have to do a lot more and fulfill the vision we have set for ourselves.